The U.S. dollar recovered slightly against a basket of major currencies on Friday, but remained near a two-week low, as traders continued to digest policy announcements from the Federal Reserve and the Bank of Japan.
The Fed has policy meetings scheduled in early November and mid-December. Economists believe policymakers would avoid a rate hike in November, in part because the meeting falls just days before the U.S. presidential election. Markets are currently pricing in a 13% chance of a rate hike at November's meeting, according to Fed Rate Monitor Tool, while for December, odds stood at around 55%.
In the week ahead, market players will be turning their attention to fresh comments from Federal Reserve Chair Janet Yellen, amid ongoing uncertainty over the timing of the next U.S. rate hike. Meanwhile, investors will be focusing on a pair of speeches from European Central Bank President Mario Draghi, for fresh hints on whether the ECB will step up monetary stimulus in the coming months to boost inflation and prop up the economy. In addition, remarks by Bank of Japan Governor Haruhiko Kuroda will be eyed in wake of last week's decision by the BOJ to modify its policy framework.
Another big event for markets could be today with the first U.S. presidential debate.
EUR/USDThe euro went up against the dollar to end at 1.1227 by late trade Friday, after touching 1.1256 on Thursday, the most since September 15. On the week, the pair added 0.64%.
In the euro zone, data on Friday showed that business activity in September expanded at the slowest rate since the start of 2015. The preliminary PMI from Markit showed that business activity in the 19-country region fell to 52.6 in September versus 52.9 in August and below market expectations.
This week investors will be focusing on a pair of speeches from European Central Bank President Mario Draghi, for fresh hints on whether the ECB will step up monetary stimulus in the coming months to boost inflation and prop up the economy.
Pivot: 1.12Support: 1.12 1.118 1.1155Resistance: 1.125 1.1275 1.13Scenario 1: long positions above 1.1200 with targets @ 1.1250 & 1.1275 in extension.Scenario 2: below 1.1200 look for further downside with 1.1180 & 1.1155 as targets.Comment: even though a continuation of the consolidation cannot be ruled out, its extent should be limited.
Gold prices edged lower on Friday, but notched the strongest weekly advance in almost two months, after the Federal Reserve held off on raising interest rates and scaled back the number of rate hikes it expects next year.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
For the week, the yellow metal ended with a gain of $31.50, or 2.34%, the best performance since the week ended July 29.
This week metal traders will be turning their attention to fresh comments from Federal Reserve Chair Janet Yellen, amid ongoing uncertainty over the timing of the next U.S. rate hike
Pivot: 1340.73Support: 1330 1325 1320Resistance: 1340.73 1343 1348Scenario 1: short positions below 1340.73 with targets @ 1330.00 & 1325.00 in extension.Scenario 2: above 1340.73 look for further upside with 1343.70 & 1348.00 as targets.Comment: the RSI calls for a new downleg.
Oil futures fell sharply on Friday, paring weekly gains, as sentiment took a hit amid concerns that the upcoming meeting among major oil producers may not yield any action to reduce the global glut.
The contract rallied to $48.26 earlier, the most since September 12, after Saudi Arabia reportedly agreed to trim its production if Iran caps its own output. But prices soon tanked after another report quoted an unnamed Saudi official who cautioned not to expect a deal and that the meeting would be more a chance to consult than reach a formal agreement.
In the week ahead, oil traders will be awaiting the outcome of the OPEC get-together on Wednesday, to see whether a deal can be reached to limit production, but they will also be focusing on U.S. stockpile data on Tuesday and Wednesday, for fresh supply-and-demand signals.
Pivot: 45.42Support: 44.22 43.74 43.51Resistance: 45.42 45.99 46.56Scenario 1: short positions below 45.42 with targets @ 44.22 & 43.74 in extension.Scenario 2: above 45.42 look for further upside with 45.99 & 46.56 as targets.Comment: the RSI lacks upward momentum.
Wall Street retreated on Friday, as lower oil prices weighed on energy shares and Facebook (NASDAQ:FB) and Apple (NASDAQ:AAPL) declined, but major indexes still posted gains for the week.
Even so, the S&P 500 recorded its best weekly performance in more than two months. Stocks were given a boost on Wednesday when the U.S. Federal Reserve decided to keep rates steady, leaving intact the low-interest-rate environment that has helped fuel the bull market.
At the closing on the NYSE, the Dow Jones industrial average lost 0.71%, the S&P 500 dropped 0.57% and the Nasdaq Composite lost 0.63%.
This week metal traders will be turning their attention to fresh comments from Federal Reserve Chair Janet Yellen, amid ongoing uncertainty over the timing of the next U.S. rate hike.
Pivot: 2147 Support: 2147 2131 2123 Resistance: 2173 2190 2200 Scenario 1: long positions above 2147.00 with targets @ 2173.00 & 2190.00 in extension. Scenario 2: below 2147.00 look for further downside with 2131.00 & 2123.00 as targets. Comment: the RSI calls for a bounce.